'Imagine that you opened a business and at first your product was unique and you had a monopoly on its production. Imagine that people just loved your product and couldn’t get enough of it. Imagine that as a result you got very rich.'
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4 December 2008 Learn More Is Your Home an Investment? 'The collapse in home values is seen by most people if recent polls are to be believed as a temporary problem that will go away soon.'
27 November 2008 Learn More Meet Me Half-way 'In your own business, if you are in the position of needing to go to your lenders or shareholders for more money to get through the crisis, you need to demonstrate buying the ticket first.'
20 November 2008 Learn More Code Words and Good Questions 'One of the problems with trying to figure out what exactly is going on right now is decoding what it is that our leaders are saying.'
13 November 2008 Learn More Imagine 'Imagine that you opened a business and at first your product was unique and you had a monopoly on its production. Imagine that people just loved your product and couldn’t get enough of it. Imagine that as a result you got very rich.'
6 November 2008 Learn More No Percentage in Pessimism "There is just no percentage in going negative right now unless you enjoy wallowing in misery."

Imagine

Imagine

Imagine that you opened a business and at first your product was unique and you had a monopoly on its production.  Imagine that people just loved your product and couldn’t get enough of it.  Imagine that as a result you got very rich.  Then imagine that as time went by you got kind of lazy in your management.  Adding to that, imagine that your company got so big that the workers thought they deserved more and more of the income.  Imagine that the government was on the workers’ side and so you acquiesced and paid them more and more and just passed it on to your customers.

Then imagine that one day competition arrived from foreign shores.  Imagine that they made your product better than you ever did.  Imagine that they even opened their factories right here in the US and took such good care of their workers that they never asked the government or anyone else to get involved lest they rock their happy boat.  Imagine that the competition looked at your business model, improved it, and made more money than you ever did.  Imagine that their customers liked the competitions’ products better than yours.

Now imagine that the inevitable has happened.  Your company is bleeding losses and the competition is poised to run you out of business.  And by this point, dear reader, you can imagine that I am talking about US auto manufacturers GM, Ford, and Chrysler.  Finally imagine that they want you, in the form of your tax dollars and lot more money borrowed and printed by the government to bail them out without fundamentally making any changes in their failed business model.  It would be insane.

As we all know, capitalism is a process of creative destruction.  There is a lesson in all of the auto mess for us as entrepreneurs; if your business model is no longer working either change it or close.  And none of us are big enough that we can call on Congress to bail us out. 

These are tough times.  If you follow the auto model of waiting and hoping for a miracle while you live on what little cash you have left, you are doomed.  The only correct assumption that a business person can make is to aggressively and proactively make changes, draconian if necessary.  Don’t do what so many of my real estate related friends are doing and wait for the market to turn.  It could be a very long time.  Oh, it will turn around, later. 

We must engage and change to win.  Finally remember that all change is not always for the better.  Be smart, seek good advice, and take it.

Posted by Herb Kay on Thursday, November 13, 2008

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